The global smartphone market has been declining since quite some time, with only a select few developing countries like India and members of South East Asia beating the global trend. According to previous reports, the global smartphone market shrunk by 5% in Q1 2019 Year-on-Year despite an impressive run by Huawei that saw it grow its global shipment by 50%, with predictions of Huawei maintaining its second spot throughout the calendar year. However, this prediction was made prior to the infamous ban by the US, and looked at total global shipments instead of just the premium segment.
The premium segment of the smartphone market has the largest margins for OEMs, so success in this area is crucial to infuse more capital into research and development purposes. Counterpoint’s latest report for Q1 2019 suggests that the global premium smartphone segment (phones costing greater than $400) shrunk by 8% YoY, which is a higher shrinkage than the global smartphone market experienced for the same quarter. This shrinkage is caused by Apple’s shipments falling 20% YoY in this quarter, as customers have begun holding onto their iPhones for longer periods. The Chinese market, a crucial area for Apple, also saw sluggish sales.
Samsung and Huawei capitalized on Apple’s falling share by capturing 25% and 16% of the premium segment respectively. However, as we all know, the trade ban was not a reality back then, so Huawei is now bracing itself for its international shipments to drop by a good 40-60% despite having shipped a 100 Million smartphones already this year. The premium segment contributes to 18% of Huawei’s shipments, so the trade war will definitely cripple marketing and R&D budgets for the foreseeable future. Apple and Huawei’s loss will be Samsung’s gain, and the company is expected to profit from the situation riding on the release of three smartphones in its flagship S-lineup and thereby covering a wider price band.
The premium segment requires extensive brand power for a company to taste success, as is evident from the combined global market share of 88% of the top three players. Despite its overall brand presence, Google only managed to command 2% of the market, which is the same as OnePlus, which has a significantly smaller purse as compared to Google.
The premium segment is expected to grow in 2019 and 2020, on the back of 5G rollout and propagation. The premium segment will see focus of this new technology, and all major players, including Samsung and Huawei will fight over for this share of the pie. It remains to be seen if consumers are as enthusiastic about this new technology as the companies and analysts.
Source: Counterpoint Research
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